Operating profits for the six months to the end of June rose to £1.3 billion as revenue increased to £9.3 billion from £9.1 billion.
The firm said it has sustained operational momentum in the first half of the year and has delivered a strong set of results with growth in order intake and sales.
It has also made good progress against its strategic priorities of operational performance, investing in technology, driving its competitiveness as well as accelerating its sustainability agenda.
BAE has a joint venture at Hadley Castle Works in Telford, known as Rheinmetall BAE Systems Land (RBSL) and specialising in land combat vehicles.
CEO Charles Woodburn said: “Thanks to the outstanding efforts of our employees across the group, we have delivered a strong first half performance which underlines our confidence in the full year guidance for top line growth, margin expansion and three-year cash targets.
“We are well positioned for sustained growth in the coming years and are ramping up our investments in advanced technologies to deliver capabilities for our customers in the face of an evolving threat environment.
“Following the decisive action taken to accelerate our UK deficit pension payments in 2020, the committed investment in the business coupled with the good operational performance, we are driving enhanced cash generation.”
The firm also announced that it would kick off a £500 million share buyback programme.
Laura Hoy, equity analyst at Hargreaves Lansdown, said that the firm was rewarding its shareholders for sticking with it through the pandemic.
She said: “It seems the group is well on the road to recovery, though, with free cash back in the black and impressive profit growth.
“While BAE is primarily a defence play, the uptick in air travel will help the group build upon its strength – its commercial flight control business continued to suffer under the weight of travel restrictions and will offer a welcome tailwind as it things return to normal
“With worries about a recession and cuts to defence spending budgets firmly off the table for now, we’re expecting BAE to continue gaining momentum and delivering shareholder returns in both the medium and long-term."